George Will: Real tax reform unlikely

“Colleagues,” said the June 27 letter to 98 U.S. senators, “now it is your turn.” The letter’s authors are Max Baucus, D-Mont., and Orrin Hatch, R-Utah, the chairman and ranking Republican on the tax-writing Finance Committee, respectively. From their combined 71 years on Capitol Hill they know that their colleagues will tiptoe gingerly, if at all, onto the hazardous terrain of tax reform.

Together with Chairman Dave Camp, R-Mich., of the House Ways and Means Committee, Baucus and Hatch propose a “blank slate” approach, erasing all deductions and credits — currently worth more than $1 trillion a year — and requiring legislators to justify reviving them. Hence the Baucus-Hatch letter, in response to which almost 70 senators sent more than 1,000 pages of suggestions. Although some often were short on specificity, the submissions were given encrypted identification numbers and locked in a safe, as befits dangerous documents.

Every complexity in the 4 million-word tax code was created at the behest of an interest group that defends it. Which is why tax simplification would be political reform: Writing lucrative wrinkles into the code is one of the primary ways the political class confers favors. Furthermore, “targeted” tax cuts serve bossy government’s behavior modification agenda: Do what we want you to do and you can keep more of your money. Simplification would reduce the opportunities for the political class to throw its weight around. Hence the flinch from simplification.

In 1986, however, Congress did not flinch. In the last 40 years, Finance, the Senate’s most important committee, has had formidable chairmen — Russell Long, Bob Dole, Bob Packwood, Lloyd Bentsen, Pat Moynihan and Baucus. And in 1986 there were additional serious reformers, including Sen. Bill Bradley and Rep. Dick Gephardt.

Of the three biggest tax preferences, unions oppose taxing as compensation — which it obviously is — employer-paid health insurance (a $260 billion benefit), and Democrats oppose ending the $80 billion deduction for state and local taxes.

The third preference, the mortgage-interest deduction, is a $70 billion benefit that goes disproportionately to affluent homeowners. But Australia, Canada and the United Kingdom, which have no mortgage-interest deduction, have homeownership rates comparable to America’s.

Baucus is proud to have been mentored by the greatest Montanan, Mike Mansfield, a Democrat who for 16 of his 24 Senate years was majority leader. Today, the main impediment to tax reform, aside from Baucus’ risk-averse colleagues, is Majority Leader Harry Reid, who Baucus insists, emphatically but implausibly, is a friend. Reid, who is as petty as Mansfield was grand, deplores partisanship but resents Democrats like Baucus who practice bipartisanship.

Each year 6.1 billion hours are spent complying with the tax code. Is there time for Congress to reduce this waste of time?

“It’s early,” says Baucus equably.

Actually, it is late in this legislative year, and elections are next year. But, says Baucus serenely, 1986 was an election year in a president’s second term. Baucus still hopes to bring Congress to an “all join hands and jump together” moment, “a tipping point where there is a sense of inevitability.”

Inevitably, however, the tax code has reached a critical mass of complexity that renders it almost unreformable. This illustrates the crisis of the regulatory state: Interest groups fasten themselves onto the government and immobilize it.

At the 2004 Republican convention, George W. Bush vowed to “simplify” the tax code’s “complicated mess.” The convention roared approval. Next, he promised new complexities — tax benefits for “opportunity zones” in depressed areas, a tax credit to encourage businesses to offer health savings accounts. Another roar of approval.

Since the 1986 simplification, the code has been re-complicated more than 15,000 times at the behest of Americans who simultaneously praise the principle of simplification. All other taxes could be abolished if we could tax the nation’s cognitive dissonance.

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unlikely...it's invaluable for the politicians and cronies in the district of corruption crowd. big money, big votes, big pork, big deals can be made....so we'll just make these poor dumb taxpaying idiots think we're serious about getting it reformed....again...

American Heritage Dictionary definition of fascism: "...a system of government that exercises a dictatorship of the extreme right, typically through the merging of state and business leadership, together with belligerent nationalism."

the idea of a "flat tax" and a simplified code has made its rounds by GOP hopefuls again and again. But a flat tax (like Herman Cain's "9-9-9") is a veiled attempt at creating regressive taxation that rewards the very rich and places the revenue burden on the middle class.

Put simply, for forty years now, big business has been jockeying to take over the reins of American government without paying for it. Money buys politicians and votes. And what do they want? No more responsibility for the health of our nation or even their employees. People are fodder for enlarging the holdings of tycoons.

They partially succeeded in that quest concerning private unions that are now weak as water. George Will is constantly trying to create the script for the corporate activism that is turning its back on the commonwealth. They don't want common wealth.

In the end, they are cutting off their own legs by robbing the middle class and sending the booty to the Caymans. I think they get this sense of privilege because of globalism. They no longer feel responsible for the greatness of America. So they now have purchased their legislators with essential bribery.

The more complex the system, presently, the more companies like GM can use their tax lawyers to get them off the hook for supporting the very governments they are buying. But a variation on the regressive flat tax idea would be even better. They wouldn't have to dodge taxes any more because they would be free of taxation. And, as they control the government they aren't paying for, they are now taxing us without representation.